Pasadena Bankruptcy Attorney
Does debt burden you? Does the idea of filing for bankruptcy leave you worried and stressed out? Finding yourself in this situation is scary and frustrating. To make matters worse, you might be unsure of what to do.
You don’t have to live with the stress any longer. Consult with a local Pasadena bankruptcy attorney to assess your situation, options, and the best course of action.
A well-versed Pasadena Bankruptcy Lawyer at The Law Office of Daniela Romero, APLC, will hear you out, help you realize your best next step, and find out if Chapter 7 bankruptcy is your answer.
What Is Bankruptcy Under Chapter 7?
To put it simply, when you file for Chapter 7 bankruptcy, every non-essential personal property is auctioned. The proceeds are distributed to your creditors.
Even if it is insufficient to pay off all your debts, your debts are still forgiven, allowing you to start again.
It’s a strategy to eliminate the majority of your unsecured debt. Specific exclusions apply to school loans, child support, alimony, and tax debt.
While it may seem like you got away with your debts, there are severe consequences. For ten years, a Chapter 7 bankruptcy remains on your credit record. As such, it will be more challenging to get a loan. If you are blessed enough to have your loan approved, the interest rate will be higher than usual.
The following is a list of the types of debts that are generally discharged in a Chapter 7 bankruptcy:
- Medical expenses
- Credit card statements
- Bills for utility
- Loans to individuals
- Certain governmental legislation
Who Qualifies for Chapter 7 Bankruptcy?
When you meet with one of our Pasadena bankruptcy lawyers, we will gather the necessary papers and information from you and listen to the specifics of your situation to establish your eligibility.
To qualify for Chapter 7, the following conditions must be met:
- You are a person, married couple, or proprietor of a small business.
- You must pass the Means Test to establish that you lack the money required to repay your debts.
- You must not have previously filed a Chapter 7 bankruptcy during the last eight years or Chapter 13 bankruptcy within the last six years.
- You must not have recently had a Chapter 7 case dismissed for fraud, misuse of bankruptcy, or violation of a court order within the last 180 days.
- Before filing for bankruptcy, you must undergo pre bankruptcy credit counseling with an authorized service.
How to File for Chapter 7 Bankruptcy
You may file Chapter 7 bankruptcy independently, but you should see a bankruptcy attorney. There’s a lot at risk, and the process may be tricky. Chapter 7 takes four to six months to finish.
Here’s how it will go:
- Fill out forms: You may get them from the US Courts website.
- Take a credit counseling course: Credit counseling firms offer individual and group courses. They must be completed before filing bankruptcy.
- Pass a “means test” for you to qualify for Chapter 7 bankruptcy. You qualify if your income is less than the state median. Another approach is if your debts are so large that you will never be able to pay them off.
- File the form: If you are short on time and haven’t finished all forms, you may file the needed paperwork immediately and the rest within 14 days. State filing costs vary but average approximately $350. You may qualify for a tax exemption depending on your earnings.
- Submit your papers to a trustee: The court-appointed trustee validates your paperwork. Tax returns, bank statements, wages, and company documentation are examples.
- Meeting with creditors: Although creditors are not obligated to attend and seldom do, you will be required to be there. Unless anything exceptional occurs, the meeting is short. The trustee will swear you in and inquire about your debt position.
- You must finish the second “financial literacy” course within 60 days of your creditor meeting. If you fail to provide your completion certification, the court may dismiss your case.
- Receive your discharge: The court discharges you of your qualifying debts. That prevents creditors from pursuing you.
Do I Qualify for Chapter 7 Bankruptcy?
Because Chapter 7 bankruptcy requires no repayment plan, it is typically a good option for California residents who cannot pay their debts and are unlikely to do so soon. However, you must be eligible to file bankruptcy.
Chapter 7 bankruptcy is automatically available to you if your income is below the median income in California. You must pass the Means Test if your salary is higher than the median rate for your state.
The Means Test looks for spare income. Having higher disposable incoe reduces your chances of qualifying. To calculate disposable income, you must:
Subtract all essential living expenditures from all sources of income (a six-month average)
Your net disposable income is the result. The IRS establishes guidelines for living costs, which aren’t always accurate.
Is There a Chapter 7 Debt Limit?
There is no debt ceiling in Chapter 7 bankruptcy. If you qualify for Chapter 7, you will be able to dismiss all of your qualified debts regardless of their amount.
But, this does not mean that you may embark on a shopping spree with a credit card before filing for bankruptcy with the aim of having the debt dismissed since this may constitute fraud or abuse. If the trustee discovers this sort of expenditure in your case, your petition may be dismissed, or you may remain liable for that amount.
Do you want to file bankruptcy? Pick up the phone to get the ball rolling.
If, after reading this guide and exploring your options, you have determined that Chapter 7 bankruptcy is the right choice for you, we encourage you to reach out to us at The Law Office of Daniela Romero, APLC. During your appointment, we will assess your situation and advise you of all available options. We’ll be able to answer your questions about Chapter 7 and help you through the process.
We look forward to meeting with you soon.